17 Mar 2014 13:20pm
WINDHOEK, 17 MAR (NAMPA) - Namibia was ranked third amongst 10 countries in a new study designed to help large, organised retailers determine where and how to best enter sub-Saharan Africas rapidly growing retail market.
The African Retail Development Index (ARDI), issued by leading global strategy consultancy firm AT Kearney on Monday, is a useful framework for retailers because it not only identifies the markets in Africa which are most attractive for retail expansion today, but also those that offer the most potential in future.
Rwanda tops the list, followed by Nigeria in second place, Tanzania in fourth, Gabon in fifth, and Ghana in sixth place.
South Africa was ranked seventh, Botswana eighth, Mozambique ninth, and Ethiopia tenth.
Botswana, Namibia, and South Africa have Africas most advanced retail sectors, as well as an existing presence of international retailers. These markets offer opportunities for retailers that have the capability to deliver differentiated products or formats that are hard to find and appeal to a growing middle class and globally minded citizens, the index, which was published on the company's website, stated.
The development of organised retail is a solid predictor of opportunity for other industry sectors as well, such as communications and telecommunications, financial services, and infrastructure.
A key partner, ARDI co-author Bart van Dijk, was quoted in the index as saying there are wide differences in infrastructure and supply chain development across African countries. Understanding the opportunities and limitations from country to country is a critical element of the retail expansion decision, he stressed.
By 2020, nearly half of all Africans will be living in cities. As disposable incomes rise, consumer spending will grow to almost US dollars 1 trillion (about N.dollars 10 trillion). Even with the challenges of entering and succeeding in Africa, the opportunity is impossible to ignore, according to the study.
Formal retail, which takes place in malls, shopping centres, and other defined trade areas, remains in the nascent stages in most sub-Saharan African countries, limited primarily to a handful of urban areas. Low rates of formal retail coupled with increasing urbanisation and the relative stability of many African economies however represents massive room for retail growth, according to the index.
The ARDI ranks sub-Saharan African countries on a zero-to-100 point scale - the higher the ranking, the higher the potential and urgency to enter the country. The countries considered for the rankings were pre-selected based on three factors - a country risk of 35 or higher in the Euro money country-risk score, population size greater than 1,5 million, and gross domestic product (GDP) per capita of more than US.dollars 1 000. The ARDI scores are based on country and business risk (25 per cent), market size (25 per cent), market saturation (25 per cent), and time pressure (25 per cent).